Supply chain transparency faces hurdles as companies struggle with global regulations and fragmented data

Despite increasing consumer demand and regulatory requirements for supply chain transparency, many organisations remain ill-equipped to address challenges such as data fragmentation, poor visibility, and geopolitical disruptions, risking strategic and compliance failures.

Increasing consumer demand for transparency about where products come from and how they are made, combined with an evolving regulatory landscape, is forcing organisations to lift the lid on their suppl...

y chains. The benefits are tangible: better business continuity, greater resilience and security, and improved sustainability. But many companies remain ill-prepared.

According to the October 2024 McKinsey report “Supply chains: Still vulnerable”, only 9% of organisations are following new laws related to environmental concerns and human rights, and 30% of respondents said they were behind or significantly behind on compliance. McKinsey’s broader 2024 survey found that 90% of companies had experienced supply‑chain challenges, underscoring persistent instability and a need to elevate resilience as a board‑level priority. Industry data also shows that nearly half of firms (45%) can see only as far as their first‑tier suppliers, limiting their ability to identify upstream risks.

Seven recurring obstacles stand in the way of meaningful traceability.

Data fragmentation
Modern supply chains are multi‑tiered, often involving hundreds or thousands of suppliers, sub‑suppliers and logistics partners. Most organisations typically have visibility only into Tier One relationships, Abe Eshkenazi, CEO of the Association for Supply Chain Management, said. That fragmentation makes it difficult to track environmental impact, labour practices and raw‑material provenance.

Poor visibility
Fragmented data creates poor visibility across extended supplier networks. “It’s a risk if you don’t know what’s going on,” Stefan Seuring, professor of supply chain management at the University of Kassel, said. “If you do not [have visibility], then you have an economic problem in your supply chain.” Greater transparency would also help firms respond to disruptions, economic shifts and social or environmental events. Gartner analyst Kevin Lawrence said new sustainability regulations are attempting to pry open historically opaque supply chains, but many organisations are behind in adapting to those rules.

Sourcing and geopolitics
Geopolitical pressure and shifting tariff regimes are prompting frequent changes to sourcing strategies, which further complicates traceability. McKinsey’s 2025 survey noted that 82% of companies were affected by new tariffs, and 39% had seen supplier or material costs increase, reinforcing the need for adaptable sourcing and near‑real‑time visibility.

Inconsistent standards
Companies operating across jurisdictions face a jumble of differing regulations and standards. Traceability thus becomes an organisational challenge as much as a technical one, requiring cross‑functional collaboration across procurement, IT and operations rather than siloed responses.

Limited resources among suppliers
Extended supply‑chain partners are often small and medium‑sized enterprises (SMEs) that make components but lack the resources or technology to provide consistent traceability data. Many large firms are expanding tech investments to onboard SMB suppliers, but that raises costs and can force trade‑offs elsewhere.

Security risks
Integrating many smaller partners with enterprise systems can improve data flows while increasing exposure to cybersecurity and ransomware threats, because SMEs often have weaker security protocols. That pushes organisations to invest more heavily in cyber defences.

Verifying supplier claims
Organisations need verification methods to substantiate supplier statements about operations and provenance. Some firms use geolocation and satellite intelligence to corroborate claims; others rely on supply‑chain risk platforms that aggregate supplier data. Such tools can reduce supplier burden but require investment and robust governance.

Technology and implementation complexity
Real‑time visibility remains elusive in practice. As the Pallite Group has noted, challenges include technology integration, supplier cooperation and data accuracy. Specialist commentators such as EcoHedge and M ACCELERATOR likewise point to data handling, cost implications and limited supplier tech access as central barriers to transparency.

What progress looks like
Where companies are moving forward, the pattern is clear: investment in supplier engagement and technology, strengthened verification and a reframing of supply chain oversight as strategic. McKinsey found that only a quarter of firms have formal processes to discuss supply‑chain risks at board level, signalling room for governance improvements. Firms that build deeper upstream visibility are better placed to mitigate disruption, comply with emerging rules and substantiate sustainability claims to customers and regulators.

The task is neither quick nor low cost, but the alternative is mounting regulatory exposure and strategic risk. As regulators and customers demand more, traceability is increasingly not just a sustainability ambition but a business imperative.

Source: Noah Wire Services